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MNB puts 2017, 2018 government deficits below target

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Photo by Jessica Fejos

The National Bank of Hungary (MNB) projected the accrual-based ESA government deficit to drop to 1.8% of GDP this year and to 1.7% next year, both below the respective government targets, in its fresh quarterly Inflation Report published in full today, according to Hungarian news agency MTI.

The forecast for the 2016 deficit was lowered slightly and the 2017 forecast remained unchanged from the December report.  

The fresh report said that economic stimulus measures announced by the government – the family home purchase subsidy, road developments, the accelerated drawdown of EU funding – and falling interest spending will offset the deficit rise stemming from the need to supplement larger EU funds with larger budget funds.

Meanwhile, the primary ESA surplus is projected to drop from lastʼs 1.3% of GDP to 1.1% this year and 0.9% in 2017.

The MNB assumed that free budget reserves (the so-called Country Protection Fund) will be spent.

The MNB did not take into account government plans to draw a balanced central budget for 2017 when preparing the forecast.

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